Rick Waterson – Market Report for February 2024
The start of February continued with strong pricing from the Far East which helped minimise the effect on recovered paper pricing of the increased logistical costs suffered because of the continued Suez Canal shipping crisis. However, by the end of last week it became apparent that the Suez Canal crisis will not be resolved quickly and that high shipping rates are here to stay.
Added to this, interest from many Indian buyers has cooled as their demand and pricing fell sharply this week, we think this is driven by poor availability of shipping to India and the fact that they are waiting to see how China wakes up after their New Year. It should be noted however that in the other Far Eastern countries such as Vietnam, Thailand, Indonesia etc, demand remains stable and shipping seems to be reasonably available.
The impact on recovered paper pricing has been that it has either remained stable or fallen slightly in OCC and Mixed from January.
In Europe, the paper mills continue with weak demand, pricing either held stable or saw small reductions as paper mill groups continue to struggle with poor order books for their finished goods. This continues in all sectors Packaging, Graphic papers, and Tissue.
The outlook is still hard to predict but we feel that the beginning of March will be a good indicator for the rest of the year. Once the Chinese New Year celebrations have ended we expect demand from China to be better understood as they set out their fibre demands respective to their order books. Europe will be entering the Easter period and will need to ensure that they have appropriate stock levels. Collection rates and availability will be easier to understand, and the shipping rates and timings will be clearer. We expect that in March we will see some upturn in demand and maybe some positivity.
Newsprint & Graphic Papers
The price of News & Pams (N&P), OI Pams and OI News was all stable, demand and availability seem also stable.
Packaging
As stated, Far East pricing stable. Pricing in Europe for OCC has remained stable. The price differential between Europe and the Far East remains high.
Mixed paper pricing saw a small reduction of around £5 per tonne to the Far East mainly the Indian market. Europe demand and pricing remained stable.
The UK mills remain quiet and purchasing only contracted volumes, little to no spot volumes available.
The folding box board sector continues to show some signs of recovery with increased purchasing. This counters the falling demand from the Far East, in particular India.
Tissues
Demand has strengthened a little as two UK mill groups have re-opened paper mills after long shuts. Pricing remained stable.
Pulp Substitutes
Pulp pricing remains stable, but demand remains weak across Europe.
Pricing prediction
As confirmed earlier, March will be a good indicator for 2024, and that there are lots of factors that will dictate this:
- Demand requirements by paper mills for the Far East and Europe.
- Availability of recovered paper from Europe and the US will it satisfy demands for the Far East?
- Logistical issues such as the Suez Canal.
There are good indications that demand will improve slightly, there is also published figures confirming reduced collections against previous years and so availability is reduced and therefore supply is down. This would lead us to believe demand should increase and price. But we do expect that there will be continued volatility. As my old boss, Ron Humphreys would say, “hold on to your hats and enjoy the ride.”